Report Alleges Tether Used Fraudulent Documents to Access Global Banking Accounts via Crypto Firms, Raises Terrorist Financing Concerns
An investigation by the Wall Street Journal suggests that Tether used deceitful methods to gain access to global banking accounts through crypto firms. The Wall Street Journal discovered that Tether opened accounts using different corporate names with executives bearing slightly different names than established executives.
The Wall Street Journal reviewed documents that showed Taiwanese accounts were opened under the name of a company called Hylab technology. One account in Turkey was opened under the name of a firm called Denix Royal Dis Ticaret Limited Sirketi, which was allegedly used by a terrorist group to launder funds. The group transacted $80 million with the account in an effort to convert crypto donations into cash.
Another company, Crypto Capital, opened accounts for Bitfinex and Tether in the name of several shell companies. These accounts served as money transmitter businesses for crypto firms, but their assets were later seized by U.S. authorities.
Signature Bank closed an account in the name of Tether part-owner Christopher Harborne after realizing that the account was related to Bitfinex. Tether denies the allegations by the Wall Street Journal, calling them “wholly inaccurate and misleading.”
Tether had previously clashed with the Wall Street Journal over allegations that the 3-month T-bill backing its USDT stablecoin were unsafe assets. Recently, Tether removed commercial paper from USDT backing.
After the New York State Financial Services Department ordered Paxos, the issuer of BUSD, a Tether rival, to stop minting the coin and to end its relationship with the coin’s namesake exchange Binance, stablecoin users shifted to Tether. In mid-February, the concentration of USDT in Curve’s busdv2 pool fell to 4%, while BUSD’s share increased to 69%. Currently, BUSD’s concentration has risen to 77%, while USDT’s share has risen to 7%.
After the NYSFSD ban, Paxos redeemed $6.7 billion BUSD, while BUSD’s market cap fell below $10 billion on March 3, 2023, for the first time since June 2021. Kaiko data revealed that market depth within 2% of BUSD-USDT and BUSD-DAI trading pairs fell from $200 million before the NYSFSD clampdown to $123 million at press time.